Data processing systems exist that typically format continuously accumulated data by displaying the data on a graph where the y axis shows the incremental data units of change, and the x axis shows the time at which, or other units of usage measurement with reference to which, the displayed data events occur. This format depicts the data events horizontally as a linear string of data points each of which may vary in vertical location.
An important illustration of such a continuous linear data environment is the data generated by continuous transactions in organized futures markets and securities markets. These markets generate transaction price reports steadily throughout each trading session. A common approach currently taken to displaying such transaction price data is to show transaction prices over selected time frames--on a graph where the y axis represents price and the x axis represents time. (Such displays are referred to as "price over time" displays.) Because the financial markets provide an evident example of continuously developing horizontal data that is commonly displayed graphically, this section primarily focuses on the background of the art of displaying and analyzing data in those markets. However, the term "market" is used in this application to describe any situation, series of events, or statistical environment that generates continuously developing data, i.e., data capable of linear display, and is not to be confined to the narrow meaning of financial markets.
Such use of charts, graphs and other visual displays of transaction data in financial markets is known as "technical analysis." Technical analysis has been defined as the measurement and study of patterns and movement in prices, transaction volume and open interest in given traded products. See e.g., P. Kaufman, The New Commodity Trading System and Methods, (1987, John Wiley & Sons, Inc.) at p.2; N. Rothstein, The Handbook of Financial Futures, (1984, McGraw-Hill Book Company) at p. 33. Technical analysis is commonly contrasted with "fundamental analysis" which focuses on economic, political or environmental factors pertinent to the market for a given product but external to market transaction price and volume.
Traders and market analysts who use technical analysis have devised a variety of statistical indices and approaches. Some of those indices and approaches are summarized in various widely-published reference texts, including, e.g., P. Kaufman, op. cit.; N. Rothstein, op. cit., and T. Meyers, The Technical Analysis Course, (1989, Probus Publ. Co.). Typical statistical charts include price-line charts, in which price levels--commonly the high, the low and the closing price levels--are charted horizontally over time, and point-and-figure charts, in which price trends and reversals in trends--commonly trends and reversals in the day's high and low prices--are charted without reference to any particular time intervals. Certain statistical summation or analysis techniques, such as charting moving average prices, calculating the momentum of price changes, and perceiving price movement patterns, are also in common use on those existing databases.
The development of computer systems and software supportive of technical analysis has enabled technical analysts to use statistical discipline more efficiently. Many systems and programs feature the capability to perform some study operations on raw or configured transaction price information. Such studies are more meaningful than raw data because they reveal developments in market prices or trends over time.
For example, Roberts-Slade, Inc. markets a technical analysis package called "FirstAlert" that enables users to conduct studies on continuous data segments. Other technical analysis packages with similar functionality include "RealTick III" by Townsend Analytics, and "Master Chartist", also by Roberts-Slade, Inc. The utility of these systems is limited in four ways, however. First, the user commonly is able to view study results only in reference to a single limited data segment displayed on a single screen or in a single window on a single screen and therefore cannot efficiently gain perspective regarding data development over many time flames. To analyze many time flames, the user has to access numerous screens and cannot compare the variety of study results in a concentrated, summary form on a single screen. Second, existing systems make allowance only for studies the results of which focus on pre-set time segments. That is, existing systems configure data and provide study capabilities in relation to streams of data organized in hourly, daily, weekly or monthly segments. Such systems, unlike the Invention, do not enable the user to configure and summarize data without reference to pre-set time segments. Third, existing systems provide only for continuous studies, from which it is very difficult to discern transaction flow beginnings and endings within the subject database. Fourth, no existing system provides a capability to study data streams so as to identify basic data-event changes and display them in a simplified, uniformly-formatted visual summary on a single screen.
This Invention overcomes those infirmities. Prior to this Invention, Steidlmayer and Kummel developed software called Capital Flow Software, which provides the user with a flexible base of continuously accumulated linear data. The database and display approach incorporated in Capital Flow Software differs from that of other existing systems in that it uses specialized analytical tools to assess the progress of market activity over time. In his most recent book New Market Discoveries (1990, KIRBMARN), Steidlmayer set forth his basic view that market activity is "regulated" by a market-dependent product distribution/capital distribution mechanism. He stated that a "working knowledge of the distribution process is key" to understanding how a market works and how prices move over time and said that distribution "is a series of prices moving in one direction to correct an economic imbalance (supply/demand) in the marketplace." In effect, price governs the distribution and its extent--i.e., its range in price and time. As price moves, it affects market activity by slowing down and eventually "stopping" a distribution of product. Thus, price eventually stabilizes a distribution so that development can begin.
Steidlmayer continues:
A natural spectrum exists [in every market] which depicts the range of overall price control. Non-price control, excessive supply or demand, holds one extreme, while price control, regulated supply and demand, occupies the other. Non-price control creates an atmosphere of uninhibited [dispersion of] product demand or supply, which results in a large distribution. In contrast, a smaller, more contained distribution evolves from a price control situation. Eventually, a price that contains both supply and demand will emerge from within [any] distribution, limiting the market to its original range . . . . PA0 It is difficult for markets to grow and be efficient simultaneously--rather the market accomplishes these two processes [--growth and efficiency--] in a series of stages . . . . The first stage consists of the distribution itself and the emergent price which stops and holds it. The second stage concerns the development of the distribution as it relates to the influence of price. This controlling price can be located at the top, mid-point, or bottom of the distribution . . . . Once the market completes its growth phase and becomes static, a third and final stage occurs which makes the market the most efficient. A price that best serves all participants is located and utilized. Essentially, the market is heavily influenced by the first two stages, while the third stage exerts a latent influence through time . . . . PA0 The movement of the market is [thus] a two-step process comprised of distributions and their subsequent development. In this process, the development of the distribution provides a time buffer or lull, much like a traffic signal changing from green to red with yellow as an interim warning signal, or a transition between the two. In the market, this time buffer is comprised of the three standard deviations; the most important of which is the first, as it defines the area of price control in the distribution.
Steidlmayer's approach to market analysis underscores the impossibility of determining the beginning, ending, and development points in a distribution if one refers only to a one-day time frame or a particular intra-day price. Distributions and their development occur over "natural" time frames--sometimes minutes, sometimes many days. A market is "in development" and a distribution flow is beginning to end when the transaction price begins to be controlled, i.e., when market activity begins to be centered around a control price.
The Steidlmayer market analysis approach is embedded in the "Capital Flow Software," which is currently licensed to traders. Like other software programs, the Capital Flow programs use a price/time "graph-format" screen; but unlike other software, the Capital Flow programs can be used to organize and depict market data in configurations that evidence genuine distribution and distribution development over non-arbitrarily segmented time. As with other systems, the data enters the Capital Flow Software program from a data stream feed; Capital Flow Software, however, enables users to organize received data into event segments that are not defined by pre-set units of time. Thus, through use of the Capital Flow Software, licensees can "customize" a horizontally-displayed database. This ability to configure the data flow in a customized way allows the data to be organized and displayed with reference to the inherent divisions or dislocations in the flow of data events.
Key to understanding or acting on data segment analysis--as reflected in the advance made by the Invention--however, is not simply the ability to configure data clusters in various ways, but, instead, the ability to identify those periods in a data stream when the market is in "minus development", i.e., when transaction prices dislocate from the control price of a preceding development, thereby becoming disconnected in price and range of price from the immediately past transaction activity. This dislocation is triggered by a change in the flow of capital--either in or out of the market. Identification of minus development provides an important key to understanding price movement (or, more generally, data progressions) because it illustrates points of change in the underlying events recorded by the data, thereby providing information about transaction requirements or opportunities (or, more generally, information about key dislocations in data event flows).
In sum, existing technical analysis systems, including Steidlmayer's own Capital Flow Software, allow users to organize and, in some ways, analyze continuous data streams. In each of these systems, however, the user can only evaluate the limited quantity of data located on a single screen. That limitation restricts the user's ability to gain a full perspective on developments in the market. The Invention, as described more fully below, therefore serves the currently unmet need to provide market analysts and transactors with the capability to model, define, control and manage a linear stream of data of any length through reduction to a simplified visible summary displayed on a single screen, which display is uniform in format for all data streams studied and for all types of data stream studies.